Assuming the following information about a product of inventory at ABC Hospital: P =$10 D =30,000 units

Question:

Assuming the following information about a product of inventory at ABC Hospital:

P =$10

D =30,000 units

O =$20

I=10%

H=$ .80

A. Find the Economic Order Quantity (EOQ)

B. Find the Total Cost of the product for the year

C. Given a constant demand, how many orders should be placed each year?

D. Given a constant demand and a lag time of 6 days between orders and receipt, how many units will be in stock when you place an order?

E. If the hospital has budgeted $250,000 for this product, what is the price that you need to negotiate with the vendor so that the clinic makes budget?

Economic Order Quantity
Economic order quantity (EOQ) is the ideal order quantity a company should purchase to minimize inventory costs such as holding costs, shortage costs, and order costs. This production-scheduling model was developed in 1913 by Ford W. Harris and has...